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WORLD GOLD
COUNCIL
Thursday, November 28, 2001
Shanghai Gold Exchange Conducted Simulated
Operation Today
A Milestone to speed up China's Gold Market
Deregulation
Shanghai: 28 November 2001 - China's gold exchange market, the
Shanghai Gold Exchange (SGE), started simulated operations today. The
gold exchange provides a platform for regulated operation of China's gold
market to develop from a planned economy to a market economy. This represents
a milestone in China's move towards gold market deregulation following
the newly introduced "Weekly Gold Pricing System" and the abolition of
"Gold Products Retail License System" by the People's Bank of China (PBoC).
The Exchange will have a positive influence on China's gold mining, trading
and gold demand in the future.
The Shanghai Gold Exchange and the simulated operation was approved by
the State Council, in coordination with the People's Bank of China, the
State Development Planning Commission, the State Economic and Trade Commission,
Ministry of Finance, Ministry of Foreign Trade and Economic Cooperation,
State Administration of Taxation, State Administration of Industry and
Commerce, General Administration of Customs, other relevant ministries
and departments, with the strong support of the Shanghai Municipal Government.
The Exchange is located at No. 15, Zhongshan Dong Yilu, Waitan, Shanghai.
The SGE is a non-profit organization and a self-disciplined legal entity
aiming to concentrate gold transaction activities. The Exchange's daily
operation will be supervised by the PBoC. The basic function of SGE is
to provide location, facilities and related services for gold trading,
to coordinate and supervise the transaction, settlement, delivery and
shipment of gold and other precious metals, to determine a fair price
for the commodities transacted in the Exchange and publicize market information.
SGE has 108 founding members including commercial banks, gold mines, gold
refineries, and gold jewelry manufacturers, mints, gold import and export
enterprises, and gold trading companies that meet the required qualifications.
SGE has adopted an electronic order matching system in accordance with
the principle that "the earliest best price in the queue gets matched".
Under certain circumstances, transactions can also be realized through
other methods, such as "proprietary asking system" for non-good
delivery gold items. Members have different options to link to the trading
platform, either on-site transaction at the Exchange or through on-line
connections. At this early stage of operation, only "physical"
trading will be conducted at the Exchange. With the further enhancement
of the Exchange and its systems, and after the approval by the relevant
authorities of the State Council, "gold futures" trading may
be introduced in due course. It is anticipated that the Exchange will
start the official operation early next year after the trial operation
period.
In order to ensure the smooth transition of the gold management system,
PBoC will run a two-tier system of gold market management during the early
stages of trial operation of the SGE. In other words, a certain proportion
of gold purchase/allocation business will still be carried out under the
current PBoC "purchase and allocation" system, mainly servicing some special
requirements, such as military and scientific research. In order to promote
the continuous development of the gold market, relevant management policies
will be adjusted gradually based on the evolution of the Exchange's operation.
Ends
Enquiries to:
Neville Wells, Director Corporate Communications, London
+44 20 7766 2758
Email: neville.wells@wgclon.gold.org
Keith Irons, Bankside Consultants, London
+44 20 7444 4155 or 07885 356 639
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